Guzman Y Gomez drops “totally unfair” enterprise agreement

Mexican fast-food franchise, Guzman Y Gomez (GYG) has failed in its bid to introduce a new enterprise agreement, following a decision by the Fair Work Commission to terminate its current document earlier this year.

In June, a number of GYG employees submitted an application to terminate the company’s existing enterprise agreement, on the basis that it had allowed for underpayment of penalty rates across a series of outlets.

Applicants Ms Galvis Laverde and Ms Quispe revealed that while some of the workers at their store were under the enterprise agreement, being paid a flat rate, others were remunerated according to the Fast Food Award, which includes penalty and public holiday rates.

“It's totally unfair…we want to work, we want work because we need work, but it's unfair always Saturday, Sunday, public holidays we are rostered because we are cheaper for the company,” Ms Quispe told the hearing in June.

Senior deputy president, Jonathan Hamberger agreed, opting to terminate the agreement, however acknowledged that GYG would need some time to introduce and educate staff on a new agreement, setting the termination date for the current agreement for November 15.

“If the agreement is approved by the employees and is then filed with the Commission and approved before 15 November, then the new agreement – which is very close to the award and has…all the penalty rates, et cetera – will actually apply before that,” Hamberger said.

GYG produced a new agreement in late October, however after criticism from Fair Work Commissioner Donna McKenna, opted to withdraw its application, meaning that all workers employed by the business will now move on to the award.

McKenna was not satisfied that GYG had explained the details of the proposed agreement to employees and franchisees, which she believed had the potential to reduce pay for some workers.

“In light of comments made by the Commission about the terms of the enterprise agreement, last week GYG made the decision to withdraw the enterprise agreement application,” a spokesperson for GYG said.

“We did this because it was apparent to us that it would not be approved. GYG’s values are at our core, we wear them with pride and would never do anything to intentionally or unintentionally disadvantage our crew or our franchisees.”

The agreement concerns have been the only blemish in what has proven to be a strong year for GYG, which announced a $44m partnership with Sydney-based private investment firm, TDM Growth Partners, bolstering international expansion plans.

Last week, the Fair Work Commission opted to terminate vacuum retailer Godfreys enterprise agreement, following reports that workers had not received a pay-rise in over seven years.

The recent focus on enterprise agreement validity and compliance has seen the debate between Award regime and agreement reignited.

“There might be a range of reasons why businesses opt for an enterprise agreement over the award regime,” Brenton Allen from MST Lawyers said.

“They include; to operate under simpler payroll conditions (instead of complex rules that are often found in awards); a general belief that collective bargaining or enterprise agreements could reduce wage costs in the long term (which has been true at different stages over the last two decades under the various national workplace laws that we’ve seen come and go); to achieve industrial peace for at least the nominal expiry period of their enterprise agreement (which is limited to 4 years); to promote positive workplace culture through the intimate employee consultation process which is required for enterprise agreement approval.”

In both the case of GYG and Godfreys, the agreement had expired, and Allen suggests that restructuring the business’ model can rely on a series of external factors.

“Some businesses pro-actively negotiate replacement enterprise agreements as they reach their nominal expiry date, while others may choose not to do so unless prompted to do so by one or more workers," he said.

"The decision to negotiate a new enterprise agreement or revert back to the award may often be influenced by business strategy, financial health and wider-economic factors.”